In a move that few in the financial advisor community favour, insurance companies soon will begin disclosing the value of compensation paid to intermediaries who sell group retirement services and group benefits plans.
That intent raises questions about whether advisors selling individual life insurance soon could be subject to similar compensation disclosure.
The Canadian Life and Health Insurance Association Inc. (CLHIA) instituted its new disclosure regime through Guideline G19, issued last month. Instituting the disclosure rule follows consultation with CLHIA members, notification of the insurance industry’s regulators and ratification by the CLHIA’s board of directors. However, G19 was ratified without prior consultation of affected advisors and intermediaries.
The disclosure is expected to commence on Jan. 1, 2019 – six months after the original implementation date of July 1, 2018. The CLHIA announced the delay in early February after receiving backlash from advisors.
“[G19] was developed at the CLHIA without the input of advisors and intermediaries, who were not consulted until the guideline was approved,” says Susan Allemang, director of policy and regulatory affairs with the Independent Financial Brokers of Canada in Mississauga, Ont. “The issue we have is not with the requirement for disclosure, but with the process.”